Presenting Gold's 7-Sigma Move

Tyler Durden's picture


While yesterday's cliff-dive in gold was impressive by any standards, the escalating drop over the past 5 days has been just as dramatic. Based on 20 years of rolling 5-day moves, the ~15% plunge is equivalent to around 7 standard deviations (in context Yao Ming is a mere 6 standard deviations taller than the average human making gold's move the equivalent of meeting a man taller than 7'7")


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Tue, 04/16/2013 - 09:19 | 3455771 knukles
knukles's picture

That's a lotta Yao Ming

Tue, 04/16/2013 - 09:20 | 3455776 Pladizow
Pladizow's picture

Antiquated Bell Curve produces inaccurate analysis!

Armstrong sees 1000 being tested.

Tue, 04/16/2013 - 09:23 | 3455803 kliguy38
kliguy38's picture

Nuthin' ta see here move along peeps....

Tue, 04/16/2013 - 09:33 | 3455845 New England Patriot
New England Patriot's picture

Seems natural enough...

Tue, 04/16/2013 - 09:34 | 3455851 bullionbaron
bullionbaron's picture

This is what I am seeing:

Surge of Buyers Rush for Physical Gold & Silver:

Tue, 04/16/2013 - 09:42 | 3455878 nope-1004
nope-1004's picture

Something under the rug smells.  They wouldn't hit it this hard for no reason, especially if that reason were sound economic activity.  The ponzi is showing it's age and horrible lack of integrity.  Why else hit the only genuine wealth instrument with such intensity?


Tue, 04/16/2013 - 09:44 | 3455910 Lets_Eat_Ben
Lets_Eat_Ben's picture

The deflation will soon begin in earnest. But, before that is allowed, the weak hands need to be shaken out of safety so they can be sufficiently raped, and all tentacles with naked shorts can unwind before they are caught with pants down.

Tue, 04/16/2013 - 09:49 | 3455936 Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

I was thinking of JPM's big silver short at $25. Their butts were in the breeze on that one, but it wasn't clear that they were margin called on it as silver sat in the high 20's/low 30s. Of course as of yesterday they were big time in the black. This is assuming that JPM was (unlike you or me) margin called or used customer funds to back up their shitty position up til now. I guess we'll see when JPM reports earnings that are "magically delicious".

Tue, 04/16/2013 - 10:01 | 3455994 JPM Hater001
JPM Hater001's picture

People- the game is rigged and those in the club you aint in have been told it's time to rotate out of paper and into physical.

Tue, 04/16/2013 - 10:19 | 3456060 SafelyGraze
SafelyGraze's picture

BOE has been liquidating again.

Tue, 04/16/2013 - 10:59 | 3456233 Alea Iactaest
Alea Iactaest's picture

Best article I have seen yet:

"[L]arge declines in gold prices match date for date the extreme developments in the banking system across several currencies. And in each case the gold selloff has previewed a larger decline in systemic liquidity that eventually catches other asset classes."

Tue, 04/16/2013 - 11:30 | 3456387 forwardho
forwardho's picture


Thanks for taking time to post link.

Tue, 04/16/2013 - 11:51 | 3456551 stewie
stewie's picture

-> Japan QE

-> something else?

Excellent article.  Thanks for the link.

Now the question is: Is bank collateral dwindling because of the new QE in Japan(in acticipation of it) or something else?

Please vote above.

Tue, 04/16/2013 - 12:48 | 3456862 Panafrican Funk...
Panafrican Funktron Robot's picture

It is interesting to note the very similar % drop in crude futures vs. gold futures over just a slightly longer timeframe (April 1st - present).  They're trading pretty much in tandem, which is not surprising given the USD's relationship with oil, and how that plays into the USD price of gold.

The negative CPI print today (yes, rigged, but still, lower than it has been recently, in the face of $85 billion a month) was also interesting.  As was the increase in the relative strength of the yen on Friday and Monday, again despite warp speed printing.  USD/CHF has been trading in tandem with the oil and gold futures plunges.  The big drop in the RUT yesterday was telling as well.  Some key things I'm looking to see:

USD/CHF below 0.92

Crude below 85

Gold below 1350

RUT below 900

30 year over 149

It's worth noting that the 30 year futs have round tripped the drop at the beginning of January and is now back to levels last seen in the late December run up.  The ES was at 1400 back then.  


Tue, 04/16/2013 - 13:30 | 3457052 Joe Sixpack
Joe Sixpack's picture

See yesterday's inventory of 100 ozt. bars on APMEX graphically. People sure took advantage of the sale!

Tue, 04/16/2013 - 10:53 | 3456192 PaperWillBurn
PaperWillBurn's picture

Paper will burn, bitches

Tue, 04/16/2013 - 11:06 | 3456277 Seer
Seer's picture

Wait!  Is that the sound of a fiddle I'm hearing?

Tue, 04/16/2013 - 14:01 | 3457196 PaperWillBurn
PaperWillBurn's picture

Paper gold included. Never confuse physical with paper...we're just getting a discount until it goes dry

Tue, 04/16/2013 - 11:17 | 3456328 jekyll island
jekyll island's picture

JPMs short position is on behalf of China, not the US. Don't expect a big squeeze from this holding.

Tue, 04/16/2013 - 10:11 | 3456023 Debugas
Debugas's picture

as soon as weak hands are shaken out the new QE will be announced

Tue, 04/16/2013 - 12:04 | 3456627 ActionFive
ActionFive's picture

Ah yes, more 'gold won't move until we QE' meme like last years/then QE official drives gold down more. QE makes gold go down/Japan too.LOL

Been 'shaking out week hands' meme last years. That's old too.

Had a little 'gold selling to cover margins' again.

Today, you go with 'QE ending gold sells off' or 'gold smells deflation first'

Better-because it is Friday, Sunday or Monday


Tue, 04/16/2013 - 12:51 | 3456872 Panafrican Funk...
Panafrican Funktron Robot's picture

I'm with you there.  The CB/PD trade is long phys/short paper.  They've been pretty obvious about this.  Just copy their trade.  

Tue, 04/16/2013 - 09:55 | 3455966 KickIce
KickIce's picture

How else can a poor banker create money from thin air and convert it to prime real estate and PMs?

Notice the story on rental properties?  More people willing to rent rather than own, just like the elites like it.

Tue, 04/16/2013 - 10:52 | 3456189 jcpicks
jcpicks's picture

What's going to happen once those that are long paper DEMAND delivery?

Tue, 04/16/2013 - 10:58 | 3456217 jvetter713
jvetter713's picture

The same thing as in 2011...they will say "We can't deliver but we'll give you a 50% premium with Fiat!"

Tue, 04/16/2013 - 11:50 | 3456564 KickIce
KickIce's picture

WW3 would be the short answer.

Tue, 04/16/2013 - 12:16 | 3456705 ActionFive
ActionFive's picture

They'll get credit and we will move to the next month.

Tue, 04/16/2013 - 11:19 | 3456334 Seer
Seer's picture

"More people willing to rent rather than own, just like the elites like it."

I don't believe that there's any preference other than to maintain/control power.

Everything shifts.  Anyone thinking that the big push for private "ownership" wasn't going to end doesn't understand the phrase: "that which cannot continue forever won't."

The way things are -with people not being able to get loans- it pretty much forces this outcome.  Yes, folks are profiting out of this because, well, because someone always does (and those putting in the highest wagers tend to be able to pull along the markets).

Perhaps people are sensing that there will be no real cycle back into "ownership."  I'd side with this view; and, I'm pretty sure that we're going to experience a significant paradigm shift (and even TPTB can't wrap their heads around it).

Tue, 04/16/2013 - 11:48 | 3456548 KickIce
KickIce's picture

Disagree, I think there'sa planned movement to end private property ownership in the US.  Take for example the subprime and see how much real estate ended up on the Feds/ Banks balance sheet.  All real assets from debt conjured out of thin air.

Tue, 04/16/2013 - 09:34 | 3455854 Almost Solvent
Almost Solvent's picture

This isn't the sigma you're looking for . . .

Tue, 04/16/2013 - 09:36 | 3455869 Cognitive Dissonance
Cognitive Dissonance's picture

Strange how this is all happening precisely when there is a real concern that the Crimex might have delivery problems.

<There is no such thing as a coincidence within a corrupt system.>

Tue, 04/16/2013 - 09:44 | 3455906 resurger
resurger's picture

286-400 =114 Metric Tonnes short. Good luck in delivery.

Fuck the corrupt CRIMEX

Tue, 04/16/2013 - 10:02 | 3455991 Jack Napier
Jack Napier's picture

Exactly my thoughts. After record outflows of physical metal in Q1, suddenly now everybody wants to be out of paper. Hmm...

Tue, 04/16/2013 - 11:35 | 3456424 Seer
Seer's picture

"suddenly now everybody wants to be out of paper."

Just wondering... any chance that TPTB want those dollars coming back, in circulation?

It's just tough to figure out, it seems like we're short both USD* AND physical PMs.

* While the USD is itself paper, the amount in circulation is dwarfed by what's on the books.

If by "paper" you meant PMs, then you can partly ignore the above.

Tue, 04/16/2013 - 10:12 | 3456026 MythicalFish
MythicalFish's picture

Agreed. Someone please give the "Sigma-Tyler" a copy of Black Swan..

Tue, 04/16/2013 - 09:45 | 3455917 tip e. canoe
tip e. canoe's picture

correction: Armstrong sees the possibility of 1000 being tested.

Armstrong also recognizes that the POG does not exist in a vacuum.

Tue, 04/16/2013 - 11:48 | 3456534 oak
oak's picture

he lost his touch long time ago

Tue, 04/16/2013 - 10:09 | 3456020 butchee
butchee's picture

"Fat tails, bitches."  Cauchy

Tue, 04/16/2013 - 12:51 | 3456874 HoofHearted
HoofHearted's picture

"Fat tails, bitchez like Black and Scholes." - Pareto

Tue, 04/16/2013 - 10:25 | 3456082 forwardho
forwardho's picture

So he thinks miners will sell well below production cost?

Has he actually ever run a real company?

Delivery will not take place below cost...ever.

Tue, 04/16/2013 - 10:41 | 3456135 Seer
Seer's picture

I think that you're missing the measurement here.

It's 5-day running averages, not life-cycles, not how much UP or DOWN over a longer period.  This clearly signals an attack (TPTB trying to exert control [to save the USD] or someone big is on the edge of blowing up).

I'd be curious to compare this move to any others.  Am think that for the most part very few things have hit like this, 10%-ish, (w/o resulting in a near or total collapse).

Tue, 04/16/2013 - 11:57 | 3456600 stewie
stewie's picture

Not entirely correct.  Read link from Alea Iactaest above. 

Tue, 04/16/2013 - 09:32 | 3455842 resurger
resurger's picture

Phat paper short squeeze with an upward kurtosis on a normal distribution worth 15%, 7 SD, with a confidence level of 100% ...

Long story short, buy the bombaclat 999 pure gold and silva physikaall

Tue, 04/16/2013 - 10:44 | 3456155 Keyser-Soze
Keyser-Soze's picture

Great analogy!

Tue, 04/16/2013 - 11:03 | 3456203 JeffB
JeffB's picture

So I wonder what would be the equivalent for flipping a fair $5 gold piece x times and it landing on "heads" every time. A couple of hundred times? A few thousand?

Per Wikipedia, 7 sigma equates to:

For various values of z, the percentage of values expected to lie in and outside the symmetric interval, CI = (-z &sigma;, z &sigma;), are as follows:

% within 7 sigma: 99.9999999997440%

$ outside 7 sigma:

fraction outside 7 sigma:

1 / 390,682,215,445

Tue, 04/16/2013 - 11:54 | 3456584 Seer
Seer's picture

So, based on these numbers there can't be someone taller than Yao Ming? ( says there's been three other NBA players taller than Ming - when there's 7+ billion humans this seems to beat the odds)

Tue, 04/16/2013 - 10:55 | 3456206 Bicycle Repairman
Bicycle Repairman's picture

"Fat tails bitchez."

It isn't a random event. 

Tue, 04/16/2013 - 09:20 | 3455753 hedgeless_horseman
hedgeless_horseman's picture



There has never been
a better time to buy gold!

Hurry down to your coin dealer
and buy the fucking dip
you fucking idiot.

Tue, 04/16/2013 - 09:20 | 3455774 LawsofPhysics
LawsofPhysics's picture

Wait for it HH.  Depending on the dealer, taking delivery of new orders may take up to a month.  Something isn't right.  More evidence that the physical market and paper markets are seriously disconnecting.  Now let's see, how has that worked out before?  History is pretty clear on where this leads.

Tue, 04/16/2013 - 09:26 | 3455812 hedgeless_horseman
hedgeless_horseman's picture



The Twelve Steps

  1. We came to understand that our government is powerless over its spending - that our nation's debt had become unmanageable.
  2. We came to believe that a power greater than our fiat currency could restore us to sanity.
  3. We made a decision to turn our savings and our investments over to the care of gold, as we understand gold to be a physical asset - not a paper promise.
  4. We made a searching and fearless inventory of our wealth.
  5. We converted to gold, to Krugerrands, and to Maple Leafs, the fiat paper assets of our wealth, thus eliminating our counterparties.
  6. We were entirely ready to have gold remove all risk of default.
  7. We humbly asked the coin dealer to reduce our exposure to The Inflation Tax.
  8. We made a list of those politicians that expose us to The Inflation Tax, and became willing to work against them all.
  9. We gave direct support to Libertarians whenever possible, except when no Libertarian is on the ballot, and then we voted against the incumbent.
  10. We continued to create wealth through our own industry, and then we converted it to gold, and promptly buried it.
  11. We sought through silver coins to increase our contact with precious metal, as we understand silver to be a physical asset - not a paper promise, paying for as many day-to-day transactions with silver as possible, using our credit card (not debit) for what was not, and paying off the entire balance each month.
  12. We, having had a fiscal awakening as the result of these steps, tried to carry this message to others, and to practice these principles in all our affairs.

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